Once upon a time, a large number of investors poured money into the catering track. Now it seems that it is time to realize returns.
Recently, chain Chinese catering brands such as Hefu Laomian, rural base, Yang Guofu and Laoxiang chicken are getting closer and closer to listing. In the early years, catering enterprises also experienced the stage of non-compliance, but now they are more and more favored by capital. The catering industry has low threshold and high replicability, but the competition is extremely fierce, and the brand effect and scale effect can not be achieved overnight.
Can China’s chain catering market of more than 3 trillion run out of a Chinese “KFC” or “McDonald’s”?
chain catering enterprises get together and go public
Euromonitor International data show that in 2020, the chain rate of Chinese catering was only 10%, while that of the United States and Japan was about 50%. The degree of capital and scale is low, but this also means that there are a lot of investment and listing opportunities in the track. Recently, representative enterprises in chain catering have heard the news of impacting the capital market.
On January 29, Juewei Food Co.Ltd(603517) (603517. SH) announced that Jiangsu Hefu Catering Management Co., Ltd. (hereinafter referred to as “Hefu Laomian”), a wholly-owned subsidiary of the company, Shenzhen netju Investment Co., Ltd. (hereinafter referred to as “Shenzhen netju”), plans to implement the overseas listing plan.
Moreover, on January 25, rural base, China’s largest direct Chinese fast food group, submitted a prospectus at the Hong Kong stock exchange, with Goldman Sachs and China Merchants Bank International as co sponsors. This is not the first time that rural base has been listed. In September 2010, the village was listed on the New York Stock Exchange. However, after the listing, the performance was poor and the stock price was depressed. In 2016, it was privatized and delisted from the New York Stock Exchange.
“Malatang first stock” may also be born this year. Recently, Shanghai yangguofu enterprise management (Group) Co., Ltd. (i.e. “yangguofu Malatang”) has submitted the material of “approval of overseas initial public offering of shares by joint stock companies” and is officially preparing to go to Hong Kong for listing.
In the chain fast food track, the local chicken and the old aunt also have the possibility of listing. In the guidance filing publicity document disclosed by Zhejiang securities regulatory bureau, the old aunt plans to be listed in China. In addition, Laoxiang chicken announced that it had completed the pre IPO round of financing, one step closer to the A-share listing.
The recent impact on the capital market in the summer vacation catering enterprises have their own playing methods, which are not the same as the subdivision track. Hefu Laomian, rural base and rural chicken stores are mainly directly operated, while Yang Guofu relies on the franchise model to expand stores.
Founded in 2012, Hefu Laomian is a Chinese pasta direct chain catering brand, with more than 340 Direct stores across the country. Hefu Laomian afternoon market focuses on pasta, fried rice and snacks to meet the needs of white-collar workers for fast and high-quality meals.
The rural base was born in Chongqing in 1996, the earliest being the “rural chicken” Sichuan restaurant opened in Jiefangbei, Chongqing. Later, it tried to transform to Western food, supplemented by Sichuan food. It had the title of “Shanzhai KFC” and later focused on Sichuan cuisine. At present, ruangji has two major brands – ruangji and Mr. rice. As of September 30, 2021, these two brands have 1145 directly operated restaurants.
Laoxiang chicken is a Chinese fast food brand characterized by Feixi laomu chicken soup stewed with 180 day native chicken and nongnongshan spring. In 2012, the brand was upgraded from Feixi old hen to rural chicken; In 2016, local chickens settled in Nanjing and Wuhan; It was settled in Shanghai in 2019 and officially laid out in 2020. So far, there are more than 1000 fast food restaurants in China.
Yang Guofu Malatang was founded by Yang Guofu in 2003. The first store was opened in Yonghe street, Harbin, Heilongjiang Province. The next year, it was renamed “Yang Ji Malatang” to “Yang Guofu Malatang”. Since 2006, Yang Guofu Malatang has been open to the outside world. Up to now, Yang Guofu Malatang has more than 6000 franchise stores in 5 overseas countries and 31 provinces / municipalities / autonomous regions of China.
Chinese food track welcomes capital fever
Public data show that before 2018, the investment and financing of China’s catering industry has been relatively active. Since the epidemic in 2020, capital enthusiasm has been high. As of August 2021, there were 86 investment and financing events in China’s catering industry, involving an investment and financing amount of 43.91 billion yuan, more than twice that of 2020. According to the 2021 Chinese chain catering brand industry report, the scale of Chinese chain catering brands accounts for about 79.8% of the total catering industry, and the scale will reach 3.15 trillion yuan in 2020; After the outbreak, Chinese chain catering brands rebounded from the bottom and recovered rapidly. It is expected to maintain an average annual growth of 8.8% in the next three years, and the scale is expected to exceed 4 trillion yuan in 2023.
Chinese catering itself has an absolute advantage in China. In recent years, with the increasing standardization of Chinese catering, most brands have both the convenience of Western fast food and the taste of “Chinese stomach”. In this context, capital is increasingly pouring into Chinese restaurant chains. In addition to several enterprises that will be listed soon, there is also a steady stream of corporate financing without listing plans.
On January 24, 2022, yisao canteen announced the formal completion of millions of angel round financing; On November 29, 2021, just four months after the last round of financing, Chen Xianggui, a new brand of Lanzhou beef noodles, won another round of financing. On October 27, 2021, Xijie Fried String completed round a financing of RMB 295 million; On August 10, 2021, Wen Heyou successively obtained round B and round C financing; On July 14, 2021, “meet Xiaomian” completed strategic financing of more than 100 million yuan, and other brands were favored by capital one after another.
The investment of two major brands of Tencent, laobangji and laoniangji, is about to hit the rural catering market.
According to the enterprise investigation data, Laoxiang chicken has received investment from Jiahua capital, Guangfa Qianhe and maixing investment. Among them, Guangfa Qianhe is an alternative investment subsidiary of a securities company wholly-owned by Gf Securities Co.Ltd(000776) (000776. SZ, 1776. HK). Rural base has twice received investment from Sequoia Fund. In addition, fund industries such as Haina Asia, Jinbang capital and blue capital have participated in rural base. In 2016, the old aunt also received investment from guojinbang capital.
It is worth noting that Internet companies are also trying to get a piece of the track. Among the investment institutions behind Hefu Laomian, Tencent investment has been the owner twice. In addition, Wuhan zhonghechuang investment, Wangju investment, Huaying capital, Longhu capital, CMC capital and Zhongwei capital are also its investors. In addition to taking a stake in Hefu Laomian, Tencent also took a stake in Lanzhou beef noodle brand Ma Jiyong; As early as 2020, JD fresh also officially announced at the meeting that it would incubate 10 catering brands with sales of more than 100 million in JD within three years, driving the industry to build a catering retail market of more than 50 billion in the future.
In addition, some listed catering companies not only operate their own brands, but also invest in some emerging chain brands. For example, the listed company jiumaojiu (09922. HK), in addition to its free brand Taier pickled vegetable fish, jiumaojiu northwest cuisine and other sub brands, has also invested in several chain restaurants such as small noodles and tiger beef brisket.
listing trend
In the early years, most catering brands were not interested in the process of “financing and listing”, and many investment institutions were deterred by the “difficult accounting” caused by the majority of cash flow of catering enterprises. In recent years, why have financing and IPO emerged one after another?
There was a view in the industry that the chain catering enterprises listed after the epidemic was stable were largely aimed at replenishing funds to make up for the losses caused by the epidemic. However, many experts interviewed by the first finance and economics reporter believe that the competition of enterprises to go public is the inevitable result of the development of catering track to a certain stage.
Wang Weiwei, managing partner of Huaying capital, said: “In the past, investors had little interest in the catering industry for many historical reasons: more cash accounts of enterprises, difficult revenue and cost recognition, difficult standardization, less chain brands, etc. However, in recent years, mobile payment has been popularized rapidly. Under the influence of upstream food technology, more mature supply chain and other factors, there are more and more chain catering enterprises, and most of these enterprises can avoid it very well The above concerns of investment institutions. “
\u3000\u3000 “Catering enterprises have gone through the previous stage of irregularities, such as purchasing no invoices, cash flow accounting errors and so on. Later, WeChat Alipay and other payment channels gradually conform to regulations, entrepreneurs are also growing, and the subdivision tracks have also run out of many good businesses, such as many stores, service capabilities and so on. At this stage, the first market has gradually moved from “chaos of war” to maturity. ” Wang Hui, marketing director of Hongzhang capital large consumption investment fund, believes that.
Wen Zhihong, a catering chain expert and general manager of Hehong consulting, said: “the operators choose to go public more from the perspective of enterprise development and take the listing as a milestone of enterprise development, because the capital platform after listing is conducive to the further development of the enterprise. Of course, it is also a good way to realize wealth for the founders or shareholders.”
Wen Zhihong also said that the upsurge of capitalization in the catering industry has begun. The deeper reason behind it is the implementation of the securities issuance registration system in the securities market, which should be more and more relaxed for the listing of catering chain enterprises.
what are investors thinking
So, is the capital fever of chain catering track just the beginning, how much imagination space is there in the future, and how many listed companies can run out? Is it even possible to have a Chinese style “KFC” or “McDonald’s”?
Enterprise survey data show that at present, there are 11.292 million catering related enterprises in China. In terms of geographical distribution, Guangdong, Shandong and Jiangsu ranked among the top three, with 1214000 enterprises, 977000 enterprises and 759000 enterprises respectively. Over the past decade, the registration of catering related enterprises has been growing. 2015 was the year with the fastest growth of registration, with 967000 enterprises registered, with a year-on-year increase of 80.9%. 2020 is the year with the largest number of registrations in the past decade, with a total of 2472000 registrations. In the first October of this year, a total of 3.841 million catering enterprises were newly registered, a year-on-year increase of 95.4%.
Wang Hui is optimistic about the investment in some subdivided catering tracks. She believes that food + catering is a super big track and one of the most hot areas in the past two years. From innovative categories such as coffee, tea and new fast food to traditional formats such as stewed flavor, noodle shop and condiment, new opportunities are generated in varying degrees. Their categories and formats are very innovative. In addition, more and more catering enterprises pay attention to the construction of supply chain. It is believed that more brands with WanDian gene will “run out” in the future.
Wang Hui further said: “To be specific, whether the brand is successful depends on whether it is a large category and whether the market capacity is large enough. Secondly, whether it has made a profit means that its single store model has matured and can be replicated on a large scale. Thirdly, it may become the absolute head brand in the region, and consumers’ dependence on its taste has built a barrier; or the store model can be restored Make it to the sinking market of the third, fourth and even fourth and fifth lines. “
Zhu danpeng believes that investment institutions mainly consider several factors. First, how much space for innovation, upgrading and iteration of this category in the market; The second is how high the gross profit margin of the category itself is; The third is how big the market capacity is; The fourth is the industry position of this brand in the original market; The fifth is the boss’s business philosophy, in addition to the service system, customer stickiness and other aspects.
Wen Zhihong told the first financial reporter: “In fact, choosing investment projects in catering tracks is to choose tracks, racing cars and racers. The so-called tracks are subdivided tracks in the catering industry, such as fast food, hot pot and leisure catering. It depends on the market space of these subdivided tracks. In fact, it is racing cars, that is, whether the enterprise’s products, business model, operation management and supply chain are competitive. Racers are The core competence of the entrepreneur and his team is not their pursuit. “
It is worth mentioning that the investment opportunities in the catering industry are not only stores, but also the supply chain behind them.
\u3000\u3000 “With the continuous expansion of the scale of stores, many cross regional catering brands have built central kitchens in various places to ensure the provision of standardized products for local stores. The supply chain continues to build barriers and help chain enterprises customize products to solve the problems of taste, technology and product innovation. During the epidemic period, professional catering supply chain enterprises not only It has not been affected, but most of them have better growth opportunities. Therefore, we can see that the barriers to the establishment of front-end stores and the construction of new brands are gradually weakened. On the contrary, the barriers to the back-end supply chain are higher, and even some invisible champions will run out. ” Wang Hui said.
Although the development potential is huge, the catering industry still has many challenges. Some investors pointed out that the catering industry has been significantly affected by the epidemic in the past two years. Previously, Haidilao and other catering brands were closed to stop losses; In addition, the fierce competition caused by the industry “Involution”, the profit pressure increased. Although the current catering industry seems to have a good momentum of investment and listing, careful study can find that many investors behind many catering enterprises preparing to be listed entered the track in the first two years.
\u3000\u3000 “In a way, the reason why we are going public now is that the investors who entered the catering industry a few years ago have time to withdraw and make profits. Now, under the excessive fierce competition, the profit pressure of catering enterprises is very great, and some investors don’t think the catering industry is a first-class investment track. In recent years, too much capital has been invested in the catering industry, which has indeed helped some The chain development of brands, but at the same time, it also makes the valuation of some catering enterprises falsely high. If investors start to enter the catering industry now, the investment cost will be very high. In fact, at present, some investors who have invested in catering enterprises begin to favor hard technology companies with core technologies. ” An unnamed person from the investment community analyzed the first financial reporter.
Another big challenge for the Chinese food chain industry is standardization. Generally speaking, the degree of standardization of western catering is higher than that of Chinese catering, and the core advantage of Chinese food is localization. How to realize the precise needs of localization through standardization has always been the difficulty that Chinese chain catering wants to solve and further improve. Zhu danpeng, an analyst of China’s food industry, believes that the integration of China and the west is a good way. “For example, real kung fu. After its standardization, it plays a very good role in the development of the Chinese food industry. Although in the future, enterprises must make more efforts in the integrity of the supply chain, the standardization of operation, the standardization of process and the standardization of food materials, the taste, food safety and scene service system are also very important.”
However, excessive standardization may also mean the loss of characteristics for catering brands. How should catering enterprises balance it?
Wen Zhihong noticed that in fact, some enterprises in Chinese fast food are over standardized, which will make the dishes lose their original taste and fireworks. In fact, the final performance will be bad.
“Some catering enterprises, such as rural chicken and rural base, instead have more chefs in the restaurant, making the dishes taste better, but will develop more rapidly. Therefore, in this sense, standardization is also relative. In addition to standardization, organizational ability is more important. A catering chain enterprise should develop rapidly and sustainably , it is important to test the organizational ability and supply chain ability of enterprises. “
According to the statistical data of enterprise investigation, in terms of catering enterprises, the registration volume increased gratifying in 2021, but at the same time, the sales volume of cancelled cranes also increased significantly. In terms of the sales volume of cancelled cranes, the sales volume of cancelled cranes of Chinese catering enterprises in the past decade reached a peak in 2019, with 875000 cancelled and revoked, an increase of 32.4% year-on-year. In 2020, the sales volume of crane was 858000, a year-on-year decrease of 1.9%. In the first October of 2021, 784000 Chinese catering enterprises were cancelled or revoked, with a year-on-year increase of 18.1%. It can be seen that opportunities and challenges coexist.
Compared with other industries, the catering industry has low threshold and high replicability. However, the competition of catering track is very fierce, the hidden dangers of food safety are relatively large, the construction of supply chain will be relatively complex, and the brand effect and scale effect are not achieved overnight. Therefore, the industry believes that in the catering industry, it is difficult for speculators and blind followers to have long-term living space, and the capital side entering the market also needs to be considered carefully.
